Ten Things Debt-Free People Do

I was debt-free once. I had paid off my student loan and had no consumer debt. I thought I would immediately start spending my suddenly-increased disposable income but I didn't. Instead I found that I was very cautious with my money until I made the choice to go back into debt via a mortgage.

It turns out that I was like most debt-free people. It takes a lot of work to become debt-free and those lessons tend to stick with people.

Patrick Demers* recently became debt-free but it took him four years to get rid of $30,000 of debt. He says in an email interview, "I had accumulated a considerable amount of school debt, credit card debt and went through a stretch of being unemployed for roughly six months."

1. They are detail-oriented and very organized

Paying off debt means knowing what you owe, developing a budget and sticking to it. Debt-free people keep track of their bills, how much they earn, how much they save and how much they invest. They speak to experts and have a tracking system in place, whether it's an Excel file or another program. Demers went to a financial planner when he started a new job in 2008. "I went to a financial planner to get my house in order and set up a debt repayment plan, as well as placing a portion of my paycheque to an RRSP."

2. They're stress-free

Debt creates stress. People worry about money, they dread next month's bills, they can't sleep at night which leads to poor work performance… the list goes on. Getting rid of debt gets rid of stress as Demers experienced when he finished paying off his debt. He says, "It felt amazing. It was like this huge weight was off my shoulders. I didn't go out to celebrate, though. I'm merely modifying my plan now."

3. They operate within a budget

Just because they have disposable income doesn't mean they spend haphazardly. If they can afford it, they'll spend. If not, they'll wait or forgo spending.

4. They pay cash

One of the reasons I was able to pay off my debt was because I chose to pay with cash. If I didn't have the money, I didn't use credit as that would increase my debt load.